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Estimating present balance required to meet given target

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If I was going to withdraw 5000.00 at the end of each year for the next four years from an account that pays an interest at a rate of 9% compounded annually. How much must there be in the account today in order for the account to reduce to a balance of zero after the last withdrawal.

How much total interest would you earn?

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Solution Summary

The solution explains the steps for calculating initial balance needed so that equal preset periodic withdrawals can be made.

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Solution:

Today's balance =PV of ordinary ...

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  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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